The author is a Forbes contributor. The opinions expressed are those of the writer.

Loading ...

Loading ...

This story appears in the {{article.article.magazine.pretty_date}} issue of {{article.article.magazine.pubName}}. Subscribe

Is Britain becoming a nation of entrepreneurs? The country’s latest unemployment figures show joblessness coming down at a rapid pace – but only because of a steep increase in self-employment. In all, some 4.55 million Britons now work for themselves, up 375,000 on a year ago. That’s more than at any time in recorded history.

Now, not everyone thinks the newly employed demonstrate the sort of characteristics we have come to associate with entrepreneurialism. For example, the Centre for Policy Studies, a right-wing think tank, argues that it is a mistake to assume the terms ‘self-employed’ and ‘entrepreneur’ are interchangeable.

The self-employed “do not generally seek to shoulder the role of an entrepreneur, driving innovation, challenging the status quo and going for strong business growth,” argues Dr Nima Sanandaji, the author of a recent report into ‘Super Entrepreneurs’ for the CPS. She thinks entrepreneurialism needs to be defined in terms of innovation.

That seems a little narrow. It’s certainly true that the self-employed aren’t all innovators, let alone instigators of disruptive business trends that will change the economy forever. They are, however, economically independent, self-motivated and enthusiastic about being their own boss. The work they produce represents a genuine engine of growth (Britain’s economy is, after all, recovering more quickly than any other in the G7 right now) and has the potential to be a significant source of employment in both the short and the long term.

Many self-employed people will not go on to employ others - research shows that one-man-endeavours are less likely than other types of company to hire staff. That said, however, significant numbers of them will recruit at some stage in the future.

Emma Jones, the founder of British small business network Enterprise Nation, thinks the Centre for Policy Studies is missing the point. “We are making the case for the self-employed,” she says. “People are choosing to start a business – it’s not because they can’t find a job, it’s because they don’t want a job.” She argues that self-employed people are entrepreneurs for a range of reasons:

Self-employment isn’t born of necessity for most people – even those who have moved into self-employment after losing their jobs frequently say redundancy was just the nudge they needed. And more than 500,000 new businesses were launched last year, a record for the UK.

More than 70 per cent of new businesses launch from home – not only are these entrepreneurs educating the next generation about what it takes to run your own enterprise, but also they’re spending their time and money in their local economies.

Entrepreneurs may not hire staff for some time after starting a business, but their collaborations with other freelancers and professionals nonetheless boost growth.

The self-employed are quick to spot gaps in the market and have the flexibility and agility to develop products and services for these niches very quickly.

Surveys suggest the self-employed are 99 per cent happier working for themselves than for someone else.

Is this an argument that matters? Yes, because the discussion is not simply semantic. Policymakers such as the Bank of England have begun to talk about self-employment as if it’s a substitute for genuine employment, with people opting for this route because they can’t find jobs. Such attitudes are mis-informed and, more seriously, may lead to policy responses designed to help people out of self-employment into employment. The better response would focus on what can be done to help the self-employed make the best of their entrepreneurial skills.